Aptma warns govt against interference in free market
KARACHI: Anwar Ahmed Tata, chairman, All-Pakistan Textile Mills Association (Aptma), has warned that any government intervention in free market mechanism of yarn trade would be disastrous for the spinning industry as it had already suffered huge losses during the last two to three years.
Speaking at a press conference, the Aptma chief claimed that there is no shortage of yarn in the domestic market, but higher prices are disturbing the value-added textile sector which did not cover against their export contracts.
On an average, he said, there had been 50,000 tons production of yarn during the last 10 years, but the value-added textile sector never faced yarn crisis.
He, however, said that owing to cotton shortage in the world market which occurred due to short crop of China by one million bales and short crop of US by 1.2 million bales, cotton prices surged from 50 cents per lb to 80-90 cents per lb.
As a result of this, the Aptma chairman said prices of raw cotton in local market also soared from Rs3,200 per maund to Rs4,500 per maund.
‘If spinners are paying higher price for raw cotton, yarn prices are ought to move in sympathy,’ he added.
As market forces have driven yarn prices higher by 20 to 22 per cent, Mr Tata said it is natural that end product prices would also move higher. But if value-added textile industry entered export contracts without covering their position for yarn, it is their own mistake. He further said that it was a wrong business decision of the value-added textile sector which made them to suffer, if any, losses are being suffered by them and this is a normal phenomenon in trade deals.
He further said that it was out of question that the Aptma or its members would cause any damage to ancillary textile industry because they had been our biggest buyers of up to 80 per cent of yarn produced in the country.
If free market mechanism is allowed to work, he said, within next two months, entire price chain would adjust upward and the value-added textile industry would soon start getting better prices in the world market.
He said over the years spinners had been importing raw cotton to meet the shortage and on an average there had been import of around three million bales. But after importing raw cotton, the spinning industry managed to export and sustain itself.
The spinning industry, S M Muneer, former president of FPCCI, said does not get any subsidy or government support and it has to pay normal mark-up rate against refinance facility given to value-added textile sector.
Even after getting such concessions and facilities in case the value-added textile sector fails to compete, this indicates that there is a serious flaw in their working or business acumen.
Responding to a question, Anwar Ahmed Tata said that the condition of registration of export of cotton yarn would hamper exports as it is time consuming.
He further said that registration of contracts to monitor export of yarn introduced by the Trade Development Authority of Pakistan is already being done by Aptma for the last 15 years by fixing a minimum export price.
Anwar Ahmed Tata assured the government and the value-added sector that yarn is available in sufficient quantity for domestic consumption and the ongoing agitation for imposing ban on export of yarn has no ground.